Elon Musk resigns as chairman of the board of Tesla in settlement with SEC

Elon Musk stepped down as chairman of Tesla’s board of directors. In addition, he pays a fine of twenty million dollars. This is the settlement that Musk reached with the U.S. market regulator SEC on a previous complaint about the CEO’s claims that he could take the car manufacturer off the stock exchange.

Musk can keep his job as CEO of Tesla and remain on the board of directors. But he must resign as chairman of the board within 45 days and may not be re-elected to that role for the next three years. That’s part of the settlement between Musk and the SEC. Tesla also has to pay a $20 million fine.

The settlement

Neither Musk nor Tesla have to plead guilty under the settlement. At the same time, the settlement follows an indictment by the SEC, which resulted from Musk’s choice to post on Twitter that he was considering withdrawing Tesla from the stock market for $420 per share. That was a striking claim he couldn’t substantiate.

Within the settlement, Telsa also has to appoint two more independent directors. A committee of independent board members should also be appointed. Musk will also be obliged to follow Tesla’s communication strategy and if he wants to tweet about Tesla, he must first have the company’s communication advisors look at the messages.

Satisfied investors?

The settlement will keep certain investors in Tesla happy. In the lawsuit that the SEC had filed, Musk was asked to be removed from the board altogether. This led to tensions, because investors were afraid that the car manufacturer would not be okay. The manufacturer has been struggling with the mass production of its vehicles for years.

Moreover, this settlement only brings to an end the SEC’s case against Musk. There are also a number of investors who have filed a case against the CEO. Their lawsuits are likely to be strengthened by the SEC’s indictment, the documentation of which provided new facts for the investors’ lawyers.